DTN Midday Livestock Comments 02/21 11:53
Pressure Develops in Cattle Trade Midweek
Sharp triple-digit losses have quickly moved through live cattle and feeder
cattle futures. This move lower is not only quickly eroding price support but
may significantly affect the ability for buyers to step into the market over
the near future.
By Rick Kment
DTN Analyst
GENERAL COMMENTS:
Sharp losses have quickly flooded into the complex with triple digit
pressure holding in both live cattle and feeder cattle trade. This overall lack
of direction in the market may continue to add uncertainty to the entire
market. Hog futures have backed away from early gains, but continue to hold
moderate gains. Corn prices are steady to higher in light trade. March corn
futures are 3/4 cent higher Wednesday. Stock markets are higher in light trade.
The Dow Jones is 101 points higher while Nasdaq is up 56 points.
LIVE CATTLE:
Sharp losses have quickly developed across all cattle trade as the feeder
cattle market continues to lead the live cattle futures lower. What started out
as narrow to moderate losses has quickly developed into a triple-digit market
tumble as nearby contracts are trading near $2.50 per cwt lower. This not only
is affecting potential trade activity, but is likely to change the tone of the
market, which has posted moderate to strong gains over the last week. Cash
cattle trade still remains quiet with a few token bids developing at $127 per
cwt in the South and $205 in the North. Asking prices are seen in the South at
$132 per cwt although Northern cattle have not been priced at this point. The
Fed Cattle Exchange Auction today listed a total of 218 head, with zero
actually sold, 127 head listed as unsold, and 91 head listed as PO (Passed
Offer). The state by state breakdown looks like this: KS 218 total head, with
zero head sold, 127 head unsold, 91 head listed as PO ($126.25); NE - no cattle
reported; TX - no cattle reported; CO - no cattle reported; IA - no cattle
reported; other states - no cattle reported. The delivery date/weighted
averages breakdown is as listed: 1-9 day delivery: 218 head total, 0 head sold;
1-17 day delivery - no cattle reported; 10-17 day delivery - no cattle
reported; 17-30 day delivery - no cattle reported. Boxed Beef cut-outs at
midday are higher, $0.85 higher (select) and up $1.93 per cwt (choice) with
light movement of 61 total loads reported (32 loads of choice cuts, 9 loads of
select cuts, 5 loads of trimmings, 15 loads of ground beef).
FEEDER CATTLE:
Sharp losses have quickly developed across the complex with traders focusing
on increased market pressure in all cattle trade. This has moved nearby futures
from $3 to $3.50 per cwt lower as the overall lack of direction in the market
continues to limit market support. There is also a growing sense of market
liquidation seen in the market following the inability to aggressively push
prices higher at the end of last week and initial trade this week. Volatility
in the market is expected to continue through much of the week.
LEAN HOGS:
Light to moderate buyer support is stepping into the lean hog futures
complex. This is adding to the market uncertainty following strong triple-digit
gains seen early in the session. The support through the week is helping to
draw additional trade to the market, but it is uncertain just how much long
support this will build through the entire complex term. Cash prices are lower
on the National Direct morning cash hog report. The weighted average price is
down $0.23 at $64.06 per cwt with the range from $57.00 to $64.16 on 3,005 head
reported sold. Cash prices are unreported due to confidentiality on the
Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report
posted 171 loads selling with carcass values falling $0.68 per cwt. Lean hog
index for 2/19 is at $71.41, down 0.80 with a projected two-day index of
$70.78, down 0.683.
Rick Kment can be reached at rick.kment@dtn.com
(BE)
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